The graph above illustrates personal consumption expenditures over the last roughly 50 years. For those of you who like logs, here’s the natural log of the same data:
The kink representing the late recession is pretty apparent. I also think I see points of inflection in the 1990s representing the dot-com bubble, around 1999 when it ended, and in the early Aughts which could be interpreted as the beginning of the housing bubble.
I guess there are a number of ways of interpreting this chart. Some people would say PCE should be a little higher than it is now. I don’t see how it could be much.
Comment.
Interesting in the log chart that expenditures begin to flatten in the early 1980’s.
To echo Andy, even though I have looked at these charts several times, it is hard to fit with some other data. We know that the big surge in borrowing started in the late 70s or roughly, about 1980. If we suddenly started borrowing a lot more, but it was not going to personal expenditures, where was it going? I dont see a surge in investment in the 80s. Were we just borrowing to keep spending on an even keel? If so, that looks really bad for our future.
Steve